http://business.timesonline.co…
Paul Volcker, former Chairman of the Federal Reserve, slayer of inflation, and the father of prosperity, figuratively grabbed the banking world by the collar and shook them.
One of the most senior figures in the financial world surprised a conference of high-level bankers yesterday when he criticised them for failing to grasp the magnitude of the financial crisis and belittled their suggested reforms.
Paul Volcker, a former chairman of the US Federal Reserve, berated the bankers for their failure to acknowledge a problem with personal rewards and questioned their claims for financial innovation.
On the subject of pay, he said: “Has there been one financial leader to say this is really excessive? Wake up, gentlemen. Your response, I can only say, has been inadequate.”
As bankers demanded that new regulation should not stifle innovation, a clearly irritated Mr Volcker said that the biggest innovation in the industry over the past 20 years had been the cash machine. He went on to attack the rise of complex products such as credit default swaps (CDS).
“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth – one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board.
Politicians need to be talking about this. Senators need to be talking about this. The TARP was successful in staving off a banking collapse, but if we do not reform the system we will be right back here 15 years (the normal frequency of major banking collapses pre Glass-Stegal).
You must be logged in to post a comment.
BY: Air Slash
IN: Weekend Open Thread
BY: Air Slash
IN: Weekend Open Thread
BY: harrydoby
IN: Weekend Open Thread
BY: Duke Cox
IN: Weekend Open Thread
BY: Maeton Jameson
IN: New Democrats Look to Challenge in Historically-Republican District
BY: harrydoby
IN: Weekend Open Thread
BY: Marla Robbinson
IN: Weekend Open Thread
BY: harrydoby
IN: Weekend Open Thread
BY: harrydoby
IN: Weekend Open Thread
BY: JohnInDenver
IN: Friday Open Thread
Subscribe to our monthly newsletter to stay in the loop with regular updates!
The health care debate, now ongoing, illustrates the extent to which the Congress is demonstrably unable to represent the population in addressing a fundamental social need when the private institutions responsible for doing so have clearly dropped the ball and yet still own the legislature lock, stock, and bandaid.
The banking industry is another example in virtually the style. News stories reporting that the GOP and bankers are colluding to avoid fundamental reforms startle no one, bring forth no denials, spark no clear call to arms by Democrats. Financing economic growth is a fundamental social need, obviously, but once the immediate panic of 2008 was quelled by TARP, poof! The problem was deemed to have been solved (for all but Citibank, thus far) and resistance to fundamental reforms became the marching orders of the day for bankers and their representatives in government, the Republican Party (which is one partial explanation for Palin and the Tea Partiers: they are not, at heart, bankers, but rather co-victims of bankers who prefer simple-minded solutions and downright ignorance since those Monkey & Banking 101 tests were so damned confusing….).
The third daunting national challenge, related to the second, is the continuing relative decline of American industry compared to foreign competitors. How this will be addressed without a viable banking industry focused on the needs of this country has not yet been explained, at least not to me. Is there someone out there who thinks that Colorado’s Democratic Party has put forward a viable Senate candidate who had demonstrated independence of the entrenched interests?
Americans have not yet reached their bottom. We still see resistance to banking regulation and a redistribution of wealth back to the middle class. This will be our downfall as a nation but those Senators and Representatives will keep their word for their biggest contributors, the banks who have ravaged our country even if it means further declination of our country. Where is the rage?
One of the reasons the politics of this economy could prove highly dangerous.
And at a moment like this, to have for a prospective candidate of the “progressive” party an apologist for the financial sector is mysterious indeed.
I wonder if their motivation of self grandiosity is more important to them than the health of our country.
Intelligent people who actually have experience in financial stability, like Paul Volker, don’t matter. Money matters; not upsetting the apple cart matters.
I had to smile at his assertion that the last useful thing to come from the banking industry was the ATM. It’s pretty much true; “innovation” in trade-worthy commodities is pretty much done – anything new is almost certain to cross the line from “innovation” into “creative accounting”.
That’s what all those nifty new innovative mortgage backed instruments were that fueled the bubble, and caused the bust.
is that the Wall Street Wonders are already creating new “risk swaps” with life insurance bundles instead of mortgages, and no one seems to be doing anything about it.
The noted author, Francis Moore Lappe, referred to our government in a recent speech in Grand Junction as being “a privately held government”. She has clearly defined the problem.